The first draft of the Renters Reform Bill published on 17 May 2023 contained wording to abolish Section 21 no fault evictions. The Bill has stalled after completing the Committee Stage in the House of Commons in November, and is still to complete the Report Stage and Third Reading, before going through the House of Lords.
Michael Gove assured Laura Kuenssberg in an interview on 11 February that Section 21 would be “outlawed” by the General Election, even though he had previously announced that the abolition of no fault evictions will be delayed until the implementation of improvements to the courts. When speaking to Laura Kuenssberg, he said “we will have put the money into the courts in order to ensure that they can enforce that”, without giving any details as to how they will have ensured the court system for Section 8 possessions for order will be fit for purpose in under a year from now.
Removing a landlord’s flexibility to terminate tenancy agreements with two months’ notice, without needing to give a reason (it doesn’t mean there isn’t one), promises to cause a profound upheaval in the private rented sector. Although the government professes to have listened to concerns that the court system would not be able to cope with the deluge of orders for possession under Section 8, without urgent improvements, no detail has been forthcoming.
The abolition of Section 21 will give renters more security. However, the prospect of orders for possession taking six months through the clogged up courts system has been concentrating landlords’ minds on whether it may be time to sell up. Landlords were already becoming more conservative over tenant selection.
In this blog post, I look at the likely implications of abolishing s21 for landlords and renters. I also set out the probable timelines for the “outlawing” of Section 21 according to information available on 11 February.
>> Related Post: What’s the latest on the Renters Reform Bill?
Last updated: 11 February 2024
Abolishing Section 21 at a glance
- What is a Section 21 no fault eviction notice?
- When will Section 21 no fault evictions be abolished?
- What court reforms are needed before Section 21 can be scrapped?
- How will landlords be able to evict tenants after Section 21 is abolished?
- What are the likely short-term consequences of abolishing s21
- Likely long-term consequences of abolishing s21
- Final thoughts
What is a Section 21 no fault eviction notice?
Section 21 of the Housing Act 1988 gives landlords the right to recover possession of their rental property by serving a minimum of two months’ notice in writing to the tenant that they wish to bring the tenancy to an end. The landlord cannot do this during a fixed term tenancy unless there is a break clause, and serving a s21 notice is subject to certain conditions (see link to Related Post below for details). The landlord does this by using standard form from the GOV website called Form 6A.
It’s referred to as a “no fault” eviction as landlords don’t need to give a reason why they wish the tenants to leave.
>> Related Post: How to serve a valid Section 21 notice using Form 6A
When will Section 21 no fault evictions be abolished?
The Renters Reform Bill is still on its journey through parliament. As the House of Commons Committee has approved the abolition of Section 21, it’s highly likely that the plans to scrap it will go ahead, assuming parliamentary time is found for the Bill.
However, the exact timing of implementing the abolition is now dependent on “court improvements”. The government has always intended to abolish s21 in the second phase of the transition arrangements, at least 18 months after Royal Assent, ie autumn 2025 or spring 2026. (This was in the 2022 White Paper). Michael Gove’s promise to Laura Kuenssberg that he would outlaw s21 by the time of the election is at odds with the provisions in the White Paper, unless he simply means that the abolition of s21 will be on the statute book, but it won’t actually have come into force.
At the current time, landlords can still use s21 to evict tenants, and that will only change when the outlawing of Section 21 comes into force.
>> Related Post: Renters Reform Timetable: What Happens When
What court reforms are needed before Section 21 can be scrapped?
The Government announced in October that it would delay the abolition of Section 21 until reforms to improve the courts have progressed:
Speeding up the courts process so landlords can quickly regain possession of their property if a tenant refuses to move out. We will align the abolition of section 21 and new possession grounds with court improvements, including end-to-end digitisation of the process. We will continue our work with the judiciary to explore the prioritisation of certain cases, including anti-social behaviour.
[…] Implementation of the new system will not take place until we judge sufficient progress has been made to improve the courts. That means we will not proceed with the abolition of section 21, until reforms to the justice system are in place.
Here are the key areas for improvement of the court system:
- digitising more of the court process to make it simpler and easier for landlords to use;
- exploring the prioritisation of certain cases, including antisocial behaviour;
- improving bailiff recruitment and retention
- strengthening mediation and dispute resolution
However, the Government hasn’t advised how long they expect this to take, even though the Opposition pressed the Government on this many times during the Committee Stage of the Bill.
The briefing notes to the King’s Speech did, however, refer to “an initial commitment of £1.2 million to begin designing a new digital system for possessions”. In other words, they’d still not designed the system. This £1.2 million is just to start the process, and the government has not announced any further funding, or an implementation timetable for this improved system.
Michael Gove told Laura Kuenssberg on 11 February that they will have “have put the money into the courts” to improve the Section 8 process by the time of the election, without giving details.
How will landlords be able to evict tenants after Section 21 is abolished?
Landlords will need to use the existing Section 8 framework to evict tenants once Section 21 has been abolished, and the Renters Reform Bill increases the number of Grounds for Possession that will be available to landlords.
I have written a detailed but practical blog post on how the new consolidated Section 8 will work in practice for landlords. However, here is a brief overview of the key new Grounds for Possession:
New Mandatory Ground: Repeated serious arrears (Ground 8A)
- A landlord would be able to serve a Section 8 notice if the tenant has been in at least two months’ rent arrears three times for at least one day within the previous three years. It would still apply if the renters are no longer in arrears at the hearing.
- The draft specifically excludes arrears due to delays from the payment of Universal Credit.
- Landlords wouldn’t be able to use this new ground to evict renters if the arrears stay under two months’ rent.
Revised Mandatory Ground: Landlord or close family member moving in (Ground 1)
- Landlords will be able to serve two months’ notice to sell or move close family members into the property. However, they wouldn’t be able to do this in the first six months of a tenancy.
- The landlord must intend it to be their (or their family member’s) only or principal home. The landlord’s family includes their spouse/partner, and their respective parents, grandparents, siblings, and grandchildren. It doesn’t include nieces, nephews etc.
New Mandatory Ground: Sale of property (Ground 1A)
- A landlord can only this ground if the tenancy has lasted more than 6 months.
- Landlord must intend to sell the property.
New Ground for Possession for Student lets (Ground 4A)
The Government announced on 20 October 2023 that they would introduce a new ground for possession for students. The document doesn’t say if the ground for possession is mandatory or discretionary.
We understand the cyclical model is critical for landlords’ business models and ensures a timely and robust supply of student accommodation. We will therefore introduce a ground for possession that will facilitate the yearly cycle of short-term student tenancies. This will enable new students to sign up to a property in advance, safe in the knowledge they will have somewhere to live the next year.
Revised Discretionary Ground: Anti-social Behaviour (Ground 14)
- The Anti-social Behaviour Action Plan published by the government on 27 March 2023 gave cause for optimism that Ground 14 will be amended to make it easier for landlords to evict tenants for behaviour that falls short of criminal anti-social behaviour.
- In the end, the new wording was a damp squib. The proposal is to change the wording from guilty of “behaviour causing or likely to cause nuisance or annoyance” to “capable of causing“.
- I’m not sure there’s much a significant difference between the two, even if the guidance claims this will make ASB easier to demonstrate. In any event, it’s a discretionary ground, so a judge will decide whether it’s reasonable to evict the tenant because of their behaviour.
- It’ll also be a lot costlier going to court, instead of the easy s21.
- Click here for my blog post which explains in detail how landlords will be able to evict tenants with anti-social behaviour using the revised Grounds 7A and 14.
Landlords will also be able to use the existing Section 8 Grounds for Possession.
For tables showing what the Section 8 Grounds for Possession will look like after the Renters Reform Bill comes into force, click here: Making sense of the new Section 8 Grounds for Possession.
What are the likely short-term consequences of abolishing s21
Now it’s clear that s21 will eventually be scrapped, the remaining landlords are faced with a couple of important decisions:
1. Sell up or adapt?
- An increase in landlords selling is likely to lead to more evictions in the short term. Why? Landlords usually receive more money if they sell with vacant possession. It’s also easier to sell without renters, for instance, arranging viewings and redecorating the property for sale.
- It will become more difficult to sell a rental property after the abolition of s21. Consequently, the approaching end of s21 is likely to concentrate the minds of any wavering landlords. This could have the opposite effect of the end of a temporary reduction in stamp duty, which leads to a surge of property purchases.
- If landlords do stay, they’ll need to adapt to the Brave New World of landlording.
>> Related Post: How to sell a buy to let
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2. Manage “problem renters” before s21 comes into effect
- Landlords often use s21 to evict “problem” renters. They might be regularly late with rent, but not two months behind. Or their behaviour may fall short of “serious” anti-social behaviour. For instance, they might not be looking after the property well, or they’re in breach of the tenancy agreement. The landlords might be able to use Section 8 grounds, but choose s21 because it’s quicker and easier.
- However, s21 has allowed landlords to give renters the benefit of the doubt, knowing they can terminate if it doesn’t work out.
- That said, as it would become more difficult to evict tenants, landlords are likely to try to lower risk in the interim period, by being less willing to give renters the benefit of the doubt.
- This may lead to an increase in evictions in the run up to 2026 as landlords will want to reduce risk before the rules change.
>> Related Post: How to serve a valid Section 21 notice
Likely long-term consequences of abolishing s21
Although abolishing Section 21 will give renters more security, it will change how landlords select renters. Landlords are likely to become more risk adverse when choosing tenants as they know it will be costly and time-consuming to rely on Section 8 to evict problematic tenants.
Unless there is more social housing, a combination of increased prudence by landlords and more landlords selling up will exacerbate further the shortage of private rental properties.
>> Related Post: How to get ready for the Renters Reform Bill
The Renters’ Reform Bill will profoundly change the relationship between landlord and renter in England. By and large, giving renters more security is good for wider society, and it’s something I personally support.
However, whilst the reforms are unlikely to make a difference in practice where the relationship is already positive, and the landlord gets a fair return for their investment, ending s21 will make all landlords more cautious when choosing renters. Particularly if the court system is not reformed so it is fit for handling Section 8 orders for possession.
As the press release that accompanied the publication of the Bill itself acknowledged, a reformed courts process is needed to ensure the new tenancy system works after the abolition of Section 21. To quote Ben Beadle of the NRLA: “It is crucial that problems with the Courts are addressed alongside the Bill progressing through Parliament. As the cross-party Housing Select Committee has warned, an unreformed court system risks undermining the Government’s planned changes to the sector.”
Although the scrapping of the requirements for landlords to have an EPC C gives landlords one less thing to worry about, the high tax caused by Section 24, combined with worries about the Renters Reform Bill, may cause more landlords to call it a day.
I will keep this blog post updated.
Last updated: 11 February 2024
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